US New-Home Sales Pop Despite Rising Mortgage Rates

Sales of new single-family homes in the United States surged in February and March, according to new data from the Census Bureau released on May 5.

New home sales, which are counted at the signing of a contract, advanced 7.4 percent in March to an annualized rate of 682,000.

March’s reading topped the consensus forecast of 650,000.

Because the federal agency is still catching up on publishing residential data following a partial government shutdown, February’s new homes figures were also released. They soared 8.9 percent to 635,000 units.

While month-to-month new home sales are volatile, they rebounded from an almost 20 percent plunge in January and a 2.7 percent drop in December.

Homebuying activity surged in March despite rising mortgage rates.

Since the start of the war in Iran, interest rates have been steadily climbing, leading to elevated borrowing costs across the U.S. marketplace.

The 30-year fixed-rate mortgage was 6.3 percent at the end of April, down from the recent peak of 6.46 percent but higher than the pre-conflict level of 5.98 percent.

Mortgage rates typically track the U.S. Treasury market, mainly the 10-year yield.

The government bond market has shifted strongly over the last ten weeks as medium- and long-term rates have surged.

The 10-year yield reached 4.41 percent, while the 20- and 30-year yields topped 5 percent. The two-year, which generally follows Federal Reserve policy expectations, hit 3.93 percent.

Prospective homebuyers may not see much rate relief during this year’s busy spring buying season.

As of May 5, the 30-year mortgage rate sits at 6.56 percent, according to Mortgage News Daily’s Rate Index.

“In general, escalation in the Iran war pushes bond yields higher by implying higher inflation via higher oil prices,” Matthew Graham, COO at Mortgage News Daily, said in a May 4 note.

“Additionally, funding the war implies the need for more Treasury supply in the future as the U.S. issues debt to pay for the war. Higher supply leads to lower prices for bonds, and lower prices mean higher rates.”

Other Market Findings

The good news for households in the real estate market, however, is that housing inventory remains elevated, though it dipped slightly in March.

New housing inventory dipped to 481,000 units ‌in March from 483,000 units in ​February, according to the Census Bureau. This is 4.6 percent below the March 2025 estimate of 504,000.

Months of inventory—the measure of current sales activity to clear the supply of new homes on the market—is 8.5 months, down from 9.1 months in the previous month.

Over the past year, the U.S. housing industry has seen a record imbalance between buyers and sellers. Today, there are 630,000 more home sellers than buyers, creating a strong buyer’s market that can offer families more leverage and less competition.

This has also led to lower prices.

In March, the median price for new single-family homes declined more than 6 percent to $387,400, the lowest level since June 2021. Additionally, most of the residential properties sold in March were below $399,999.

Still, activity in the housing market has been mixed as of late.

Existing home sales declined 3.6 percent in March to 3.98 million, according to the National Association of Realtors. At the same time, pending home sales rose by 1.5 percent.

On the pricing front, upward pressures could be building, at least for existing homes.

Seventy-one percent of the 235 metro markets the NAR tracks saw home prices rise in the first quarter of the year, the National Association of Realtors said in a report published on May 5.

The national median single-family existing home price jumped to $404,300 in the January–March period, up 0.5 percent year over year.

Homebuyers are facing elevated prices, but lower mortgage rates could help offset affordability barriers, says Lawrence Yun, the association’s chief economist.

“Even though mortgage rates are higher than earlier this year, rates remain comfortably below last year’s levels,” Yun said in a statement. “Lower mortgage rates will allow more potential buyers to qualify for and obtain a mortgage.”